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Are your spend classification efforts relevant and truly moving the needle?

Last month, we examined the current constraints on procurement today and discovered that data spend quality is an issue that’s holding organizations back. Digging in further, we found that spend classification is a big factor affecting organizations’ abilities to get high-quality data. The reality is you don’t know what you’re actually spending in each category. For many procurement teams, getting the insights they need is challenging because classification is painful and time-consuming, and they don’t know how to make things better.

Let’s take a deeper dive into some of the problems with spend classification today:

What’s the Price: Vendor Introduction (Part 2 — Product Strengths and Weaknesses) [PRO]

In our last brief we introduced you to What’s the Price, a five-year-old Dutch vendor that offers should-cost modeling tools for supplier negotiations. Born out of the frustrations of two procurement professionals who wanted to get faster, more accurate price estimates to counteract supplier quotes, WTP makes smart use of publicly available big data to drastically cut the time and effort in building should-cost models. The solution is notably easy to use and provides a lot of guidance for users along the way, allowing WTP to get organizations up and running with just a two-hour training session. But as with all younger solution providers, there areas for growth, as well, including a few opportunities that could further support WTP’s preference for a self-service deployment approach.

Part 1 of this brief provided some background on What’s the Price and an overview of its offering. In Part 2, we provide a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis and a short selection requirements checklist that outlines the typical company for which WTP might be a good fit. We also give some final conclusions and takeaways.

What’s the Price: Vendor Introduction (Part 1 — Background and Solution Overview) [PRO]

Successful supplier negotiations begin long before a category manager sits down at the negotiating table, physical or virtual. Effectively sourcing a product or component requires an understanding of the fundamentals driving a category, the competitive dynamics in a given industry, and a negotiation strategy based on realistic prices or savings that procurement hopes to attain.

But more often than not, determining how much something should cost — that is, what procurement should realistically pay for goods or services — is a process supported more by guesswork than by data science. And building such models can be time-consuming: Cost engineers creating clean-sheet calculations of a product’s likely cost often take weeks before coming back with an estimate.

What’s the Price, in contrast, can deliver an estimated price in less than five minutes — for any category, industry or product.

That may sound a bit like magic, and from an end user’s perspective, it can feel that way. But beneath the hood, WTP, a five-year-old Dutch vendor founded by two former senior procurement professionals, relies on a straightforward approach, underpinned by a smart application of big data.

WTP aggregates prices and cost drivers across hundreds of thousands of mostly public data sources to produce top-down estimates for commodity prices, industry cost structures and product cost models. The result is a fast and reasonably accurate expected market price that procurement can use to set the stage in supplier negotiations, putting the buy side on stronger footing against price increases or “black box” quotes from sales reps.

Part 1 of this Spend Matters PRO Vendor Introduction offers an overview of What’s the Price and its capabilities. Part 2 includes a look at WTP’s product strengths and weaknesses, a company SWOT analysis, and a selection requirements checklist for those that might consider the provider.

How AI in healthcare supply chain management (SCM) can cut costs

healthcare

Artificial intelligence has the potential to transform the healthcare industry in monumental ways. Far from having computers make decisions about diagnosis or treatment options, however, many advancements on the horizon deal with the more mundane aspects of managing healthcare facilities and professionals that impact one of the biggest challenges in modern medicine — cost control.

Syft, a provider of healthcare-focused solutions that changed its name this year from Management Health Solutions, researched the potential benefits of modernizing healthcare supply chain management (SCM) in its recent report.

Prodigo Solutions Vendor Introduction: Analysis, SWOT, Checklist (Part 2 — Product Strengths and Weaknesses) [PRO]

locum tenens

In our last Spend Matters PRO brief, we introduced you to Prodigo, an 11-year-old provider based near Pittsburgh that is deploying a platform that’s specific to healthcare procurement and contract management. With 20% of the U.S.’s largest integrated delivery networks (IDNs) and more than 30% of Gartner’s top hospital supply chain departments as customers, Prodigo has numerous use cases and a large pile of healthcare-related data on which it has built a strong core product. And although it is not always best-in-class when compared against leading P2P providers that lack a vertical focus, Prodigo’s willingness to target the needs of a specific market have led to some commendable product strengths as well.

Part 1 of this brief provided background on the company and an overview of Prodigo’s offering. In Part 2, we provide a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis, a short selection requirements checklist that outlines the typical company for which Prodigo might be a good fit, and some final conclusions and takeaways.

Prodigo Solutions: Vendor Introduction (Part 1 — Background and Solution Overview) [PRO]

healthcare

Rogue spend is a common problem for procurement in all industries, but in healthcare the issue is on a whole other level. Whereas the typical organization can see about 30% of indirect spend that falls into the off-contract category, that number can climb to as much as 60%.

There are multiple factors that drive these rogue purchases. Notably, in healthcare the distinction between direct and indirect spend is less of an issue than the difference between clinical spend (that is directly related to patient care) and non-clinical spend. These categories are managed a little differently from how procurement organizations typically approach direct and indirect purchases. Internal demand for clinical items can vary significantly, and since not having an item in inventory could be a matter of life and death, the need to spot buy specific medical devices or materials isn’t analogous to an ad hoc spot buy that you might find for many indirect spend categories.

Healthcare spend is also nuanced because the requestors — the medical personnel — often have a stronger say in what is purchased and to what degree cost is a factor than procurement gets compared with other verticals. This includes “physician preference items” where a physician MUST have a certain medical device/instrument that is different than the hospital system standard (and hopefully not because the MD is getting wined and dined by the manufacturer or distributor!).

This industry dynamic applies to the healthcare supply markets, as well, where unique features and quirks, including a much higher use of group purchasing organizations (GPOs) and strong influences by medical device manufacturers over how their products are priced and used within hospitals, only further complicate procurement efforts to bring spending under control. Over 90% of GPO revenue is from supplier-funded “administrative fees” (i.e., rebates that are exempted from federal government kickback regulations), and until this commercial model goes away, hospitals still need to automate them (including percentages of those fees shared back with the hospital) and other supply chain requirements such as distributor owned/managed inventory within the system.

These healthcare-specific challenges are well-known to Prodigo Solutions, a purchasing technology solutions company based in the suburbs of Pittsburgh, Pennsylvania. Originally grown out of the UPMC’s needs for better managing its own internal purchases, Prodigo today operates as a standalone software provider, offering tools that support e-procurement with healthcare-specific controls and post-signature contract management and compliance. Its customers include both integrated delivery networks (IDNs) and small community hospitals alike, and its healthcare marketplace currently facilitates transaction volumes in excess of $15 billion.

This two-part Spend Matters PRO Vendor Introduction series offers a candid take on Prodigo and its capabilities. It will include an overview of Prodigo’s offering, a breakdown of what is comparatively good (and not so good) about the solution, a SWOT analysis, and a selection requirements checklist for companies that might consider the provider.

PPC: On Late Payment — Regulate, Shame or Just Deal with It?

There was some recent shaming of some very large companies by the UK government that did not comply with the Prompt Payment Code (PPC). Seventeen large companies, including heavyweights such as Vodafone, Rolls Royce, SSE and British Sugar, were suspended pending promises to fall into line.

Short of legislation, shame can be a tool. But when we think of the damage that large corporates have done far beyond late payment (i.e., Purdue Pharma & the opioid crisis, Lehmans & the Financial crisis, etc.) without paying any price, you have to wonder how effective shaming will be.

Certify’s SpendSmart Report Sees Uber Slip, Lyft Gain — and Air Travel Be More Competitive Than Ever

travel

Uber and Lyft continue to capture an increasing share of employee travel and expense costs as measured by the Q1 2019 SpendSmart Report from Certify. In addition to continuing to decimate taxi services in all but a few protected markets, both services have continued to increase their prices since the first quarter of 2018, with Lyft experiencing double digit growth in some key markets.

Big Costs in Small Parcels: A Webinar on Navigating Shipping Spend, Improving Contracts and Saving Money

For many companies, shipping small parcels to customers is a hefty, unavoidable cost. So what are buyers to do? Imagine the difference if you could uncover the specifics of your small parcel freight needs, then negotiate with small parcel freight suppliers to ensure better, more consistent pricing.

Spend Matters recently participated in a webinar  with experts from NPI Financial and Spend Management Experts that provided detailed information about what’s happening in the shipping industry. “Small parcel is way more complicated than you think,” Spend Matters' Pierre Mitchell said. “Organizations do have a sense that they’re not very good at being able to manage at this level of complexity.”

Artificial Intelligence Meets Payables and Dynamic Discounting: Oracle Cloud Vendor Snapshot Update (Part 1) [PRO]

At the recent Oracle Modern Business Experience event, artificial intelligence figured prominently in many of the mainstage and breakout sessions. Not surprisingly, AI is working its way into Oracle’s procurement suite of cloud capabilities.

Oracle’s investments in AI are centered across several areas leveraging a range of underlying algorithmic approaches (e.g., semantic analysis, neural nets, deep learning, etc.) that individually or collectively serve to enable different business use cases centered on what Oracle calls pattern recognition, smart recognition and smart prediction.

Within its procurement suite of cloud solutions, Oracle has released two AI-driven applications: intelligent supplier categorization (think spend classification) and intelligent payment discounts.

This two-part Spend Matters PRO research brief provides an introduction to the intelligent payment discounting module. For an introduction to the Oracle Procurement Cloud, see our previous Vendor Snapshot coverage (Overview and Introduction, Strengths / Weaknesses and Recommendations/Competitive Alternatives) and Comparative SolutionMap ratings as part of SolutionMap for Q1 2019 for E-Procurement, Invoice-to-Pay and Procure-to-Pay.

Part 1 of this research brief provides a description of capabilities and review of the solution itself — what it does, how it works and how AI makes it effective. Part 2 explores the strengths and weaknesses of the solution and provides customer recommendations.

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3 KPIs for Digitally Transforming Your Business Spend: How Do You Measure Up?

It’s important to set measurable goals to assess the maturity of your procurement and expenses processes.

By analyzing the largest accessible source of business spend data (the nearly $1 trillion that flows through the Coupa platform), Coupa Business Spend Management (BSM) experts have identified 12 Key Performance Indicators to help you gain insight into and advance your organization’s maturity across the spectrum of BSM processes, from sourcing to procurement to payments.

Here are three of the most influential KPIs for purchasing, invoicing and expenses — and how companies with digitally mature processes are performing in these areas:

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AI-Powered Tech Takes E-Procurement to the Next Level

procurement

Imagine walking into a car dealership and the first question the salesperson asks you is, “How much do you want to overpay?” It’s a ridiculous question, right? No one wants to pay more for a product than they absolutely have to. Yet, this is exactly what too many corporate buyers unwittingly do, every day.

While most procurement managers would likely concede that there was “room for improvement” in their organizations’ MRO spending execution, few have the visibility and analytics capability necessary to accurately measure what their performance level truly is. If they did, my guess is they would be shocked at how often they overpaid for their indirect materials.

Find out what happened when EqualLevel deployed AI in part of its e-procurement solution to find the best prices.